What happened to Bankrupt Crypto Exchange FTX?
Growing cryptocurrency trading firm FTX is now short billions of dollars after acquiring the crypto equivalent of a bank operation.
The exchange, once one of the world’s largest, filed for bankruptcy protection last week, and its CEO and founder resigned. Hours later, the trading company said there had been “unauthorized access” and that the funds had disappeared. Analysts say hundreds of millions of dollars may have disappeared.
The revelation of the once-big deal is causing shockwaves in the industry. Here’s a look at the company’s fall so far:
Why did FTX disappear?
Customers fled the exchange due to fears about whether FTX had enough money, and agreed to sell them on cryptocurrency exchange Binance. But the deal fell through while Binance’s due diligence on FTX’s balance was pending.
FTX has valued its assets between $10 billion (approx. Rs. 81,100 crore) to $50 billion (approx. Rs. 4,05,660 crore), and counts over 130 subsidiaries worldwide, according to its bankruptcy filing.
FTX and a number of affiliated companies — including founder of Sam Bankman-Fried’s hedge fund, Alameda Research — filed for bankruptcy in Delaware on Friday.
This week’s events marked a shocking turnaround for Bankman-Fried, who was hailed as somewhat of a savior earlier this year when he bailed out several cryptocurrency companies that ran into financial trouble. He is recently worth $23 billion (roughly Rs. 1,86,600 crore) and has been a prominent political donor to the Democrats.
Has it been hacked again?
FTX confirmed on Saturday that there had been unauthorized access to its accounts, hours after the company filed for Chapter 11 bankruptcy protection.
The debate created on social media about whether the exchange was hacked or someone inside the company stole the funds – a possibility that cryptocurrency analysts could not rule out.
How much money is involved is not clear, but analytics firm Elliptic estimated on Saturday that $477 million (roughly Rs. 3,870 crore) was missing from trading. New FTX CEO John Ray III said it was shutting down the ability to trade or withdraw funds and take steps to protect clients’ assets.
Is my bitcoin safe?
People who own Bitcoin should be fine if they block them from an exchange like FTX that effectively functions as a “crypto-casino gambling website,” said Cory Klippsten, CEO of financial services firm Swan Bitcoin.
“Any exchange is a security risk,” Klippsten said. it’s money,” he said.
Is FTX under investigation?
The Royal Bahamas Police Force said on Sunday it was investigating FTX, adding to the company’s woes. The police force said in a statement on Sunday it was working with security regulators in the Bahamas to “investigate any criminal misconduct” involving the exchange, which moved its headquarters to the Caribbean country last year.
Is anyone else investigating?
Even before filing for bankruptcy and bankruptcy, the US Department of Justice and the Securities and Exchange Commission began investigating FTX to determine whether any crimes or securities violations had been committed, according to a person familiar with the matter who last spoke to The Associated Press. a week on condition of anonymity because they could not discuss details of the investigation publicly.
What are the results?
Companies backing FTX are writing down investments, and the prices of Bitcoin and other digital currencies have fallen. Politicians and regulators want tighter oversight of an unregulated industry. FTX said on Saturday it is moving as many digital assets as it can be traced to a “cold wallet,” which is a way to store assets offline without allowing remote control.
FTX entered into many sports-related deals, some of which fell through. The NBA’s Miami Heat and Miami-Dade County decided Friday to sever their relationship with FTX, and will rename the team’s stadium. Earlier on Friday, Mercedes said they would immediately remove the FTX logos from their Formula One cars.